Markets

The bull case for Netflix ahead of earnings

Netflix looks attractive heading into its quarterly earnings report being issued Monday afternoon, even after a massive run, strategist Mark Tepper says. Netflix shares have jumped 15 percent this year alone, and a whopping 65 percent in the last year. Shares rose over 1 percent on Thursday after Morgan Stanley released a bullish note on the stock. Ahead of earnings, investors still have time to get in on the stock despite its run, said Tepper, president and CEO of Strategic Wealth Partners. Here are his reasons: • While many investors may focus on revenue and earnings growth, the key metric to watch will be subscriber growth, which will likely beat analysts’ expectations. • This would be a strong indication of long-term growth and show the streaming video company is on pace for a st...

Wisconsin Nonfarm Employment Flat

Today, the DWD released statistics for December here. Total nonfarm payroll declined slightly, private increased slightly. The cumulative gap with respect to Minnesota (and the US) widened in both cases. Figure 1: Nonfarm payroll employment in Minnesota (blue), Wisconsin (red), and US (black), all in logs normalized to 2011M01=0. Light green shaded dates indicates data not yet benchmarked using QCEW data. Source: WI DWD, MN DEED, BLS and author’s calculations. Figure 2: Private nonfarm payroll employment in Minnesota (blue), Wisconsin (red), and US (black), all in logs normalized to 2011M01=0. Light green shaded dates indicates data not yet benchmarked using QCEW data. Source: WI DWD, MN DEED, BLS and author’s calculations. Given the estimation error, these changes are probably not statist...

Ruminations about What (and How) to Post in the Current Times

Reader rtd admonishes me: Someone with your smarts & level of education should be able to ignore these types of political rhetoric & certainly not induce you to create a blog post devoted to such atrocious comments & lunacy (particularly considering, as you’ve explicitly noted in the past, that you hold your readers to a relatively high regard as it relates to their intellectual capabilities). Unfortunately your (persistent) biases & subjectivity don’t seem to allow you to take the high road He’s writing in response to the December 2015 post entitled NYT: “Donald Trump Calls for Barring Muslims From Entering U.S.”. At the time, I re-worded the Chinese Exclusion Act of 1882 to fit then-candidate-Trump’s call. Now, in the context of the Mr. Trump’s recent discussion of determ...

Market Expectation of Shut Down on 1/22 (Monday) Breaks 50-50

according to PredictIt as of 4:35PM Central.

The bond market is about to do something that could spell trouble for stocks

The bond market is in the process of making an important move, and stock traders are keeping a wary eye on it. On Thursday afternoon, the benchmark 10-year Treasury yield crept close to 2.63 percent, a level it came near last year but has not really traded above since 2014. The yield was above 2.62 percent in afternoon trading Thursday. “The pain point comes at 2.63 percent, where everybody believes that’s the breakout, and everyone will be keying on that,” said Art Hogan, chief market strategist at B. Riley FBR. “This is a more-than-three-year range that we’re attempting to break out of here.” He added that technically it appears there could then be a quick move higher to 2.75 percent. While 2.63 percent and even 2.75 percent are not historically high y...

Apple and others bringing home foreign cash may be a big enough force to boost the US dollar

The dollar index is down about 10 percent in the past year, but it may be about to get a slight pickup from corporate America. Bank of America Merrill Lynch currency strategists expect to see other companies follow the lead of Apple and announce plans to bring home cash they have been hoarding overseas. That could boost the dollar as companies move money out of local currencies and into dollars. Apple has $250 billion overseas, and it announced plans to pay taxes of $38 billion on money it holds offshore. Bank of America equity strategists, in a separate note Thursday, said there is $1.2 trillion overseas cash in non-financial companies, and tech companies and health care are two sectors where there will be a lot of cash returned. Repatriation of foreign profits has been mandated as part o...

After-hours buzz: IBM, AXP & more

Check out the companies making headlines after the bell: IBM shares fell nearly 4 percent after the bell. The computer technology company announced fourth quarter financial results that surpassed Wall Street expectations. IBM reported $22.5 billion in revenue, breaking a 23 quarter streak of declining year-over-year revenue decline. The company also projected revenue growth in the upcoming quarter, despite a one-time, $5.5 billion charge from tax reform. American Express stock fell nearly 2 percent in extended trading. The credit card company beat analyst expectations on fourth quarter earnings and revenue, but announced a suspension of dividend buybacks, citing upfront charges from tax reform. “We plan to suspend our share buyback program for the first half of 2018 in order to rebui...

Market shrugs off congressional budget bickering for now, but Goldman sees 35 percent chance of shutdown

Markets are more or less shrugging off the potential for a government shutdown, even though the odds for a closure seem higher than the last time Congress temporarily extended spending authority. Goldman Sachs economists on Thursday put 35 percent odds on a shutdown, higher than usual, as Congress and the White House posture around a continuing resolution ahead of Friday’s deadline. “The more likely outcome appears to be a short-term extension of spending authority to avert the shutdown,” Goldman economists wrote in a note. The current proposal would set the next deadline at Feb. 16. “This would actually increase the risk to financial markets, as it would put the next spending deadline closer to the debt limit deadline, which could come sometime between late Februar...

AmEx dips after company says it will temporarily suspend buybacks due to tax law

American Express announced it will be temporarily suspending its buyback program after the recent tax overhaul. In the company’s earnings release Thursday, CEO Ken Chenault said AmEx will suspend its buyback program for the first half of the year. The CEO said the company made this decision to rebuild its capital because of the upfront charge triggered by the new tax law. Including the impact from the recent tax legislation, American Express reported a net loss of $1.2 billion or $1.41 per share in the fourth quarter. In the year-ago quarter, the company reported a net income of $825 million or 88 cents per share. Chenault said, however, that the company will continue to pay its quarterly dividend. Chenault said he believes the new tax law will ultimately have a positive effect on bo...

IBM shares fall despite first growth in 23 quarters

IBM saw its stock go down more than 4.5 percent after it reported better-than-expected earnings for the fourth quarter and full year of 2017 on Thursday. EPS: Excluding certain items, $5.18 in earnings per share vs. $5.17 in earnings per share as expected by analysts, according to Thomson Reuters. Revenue: $22.5 billion vs. $22.06 billion as expected by analysts, according to Thomson Reuters. IBM went 22 consecutive quarters with revenue declining on a year over year basis. Now that streak has finally ended — a positive sign as the company faces competition from faster-growing companies like Amazon, Google and Microsoft. IBM said it took a one-time charge of $5.5 billion as a result of the recent passage of U.S. tax reform. “The charge encompasses several elements, including a ...

Stock market’s value under Trump has grown by $6.9 trillion to $30.6 trillion

The U.S. stock market has added nearly $6.9 trillion in market cap since President Donald Trump was elected, already close to half of what was added in all eight years of President Barack Obama‘s tenure. The market cap, based on the Russell 3000, surpassed $30 trillion for the first time last week and was at $30.6 trillion Thursday, according to Bespoke. “I think the performance in the first year has exceeded almost everybody’s expectations,” said Paul Hickey, co-founder of Bespoke. Hickey uses the Russell 3000 to measure overall market cap, since it represents about 98 percent of all U.S. stocks. When Trump was elected, stocks rose out of the gate after an initial late-night collapse in futures prices. After that, the market rewarded stocks and sectors that would b...

BNY Mellon expects more severance charges in 2018; shares sink

Bank of New York Mellon expects to book more severance charges in 2018, its chief executive said, as the custodian bank tries to cut costs and streamline its businesses. Shares fell 4.2 percent to $55.43 in early trading on Thursday, after BNY Mellon recorded $246 million in severance and litigation charges in its fourth-quarter earnings report. The severance charges in the quarter is mainly related to changes in senior management and in its U.S. asset management business, CEO Charles Scharf said on a post-earnings call. The bank also recorded a benefit of $427 million related to the new federal tax laws. Excluding tax benefit of 41 cents and charges of 24 cents, the custodian bank reported a profit of 91 cents, in-line with analysts’ expectation, according to Thomson Reuters I/B/E/S...